Question

Consider the demand for Fresh Detergent in a future sales period when Enterprise Industries’ price for Fresh will be x1 = 3.70, the average price of competitors’ similar detergents will be x2 = 3.90, and Enterprise Industries’ advertising expenditure for Fresh will be x3 = 6.50. A 95 percent prediction interval for this demand is given on the following Excel add-in (MegaStat) output:
a. Find and report the 95 percent prediction interval on the output. If Enterprise Industries plans to have in inventory the number of bottles implied by the upper limit of this interval, it can be very confident that it will have enough bottles to meet demand for Fresh in the future sales period. How many bottles is this? If we multiply the number of bottles implied by the lower limit of the prediction interval by the price of Fresh ($ 3.70), we can be very confident that the resulting dollar amount will be the minimum revenue from Fresh in the future sales period. What is this dollar amount?
b. Calculate a 99 percent prediction interval for the demand for Fresh in the future sales period.


$1.99
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  • CreatedMay 28, 2015
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